Catalog

Scope of Disaster Took Time to Uncover
ADB Review [ August-October 2006 ]

The 27 May earthquake in Indonesia did not initially appear as devastating as it turned out to be in the final analysis. Those who arrived on the scene shortly after the disaster found most basic infrastructure intact. The phones worked, the roads were accessible.

AFTERMATH More than 150,000 houses were completely destroyed while another 260,000 sustained damage. The housing damage alone accounted for over 50% of the total losses

But once the damage and loss assessment teams began adding up the destruction, what they found was startling. An estimated rupiah (Rp)29 trillion, or about $3.1 billion, worth of damage had been done, making it one of the most costly natural disasters in recent times. More than 150,000 houses were completely destroyed and another 260,000 suffered some damage. The housing damage alone accounted for over 50% of the total losses.

The local economy, principally small businesses, suffered damage and losses of about $960 million. About 30,000 small— and medium—sized enterprises were directly affected, which in turn impacted more than 650,000 workers employed in the sectors that were hit.

The health and education sectors suffered damage and losses of about $340 million, according to the assessment team’s report published in June 2006.

The report, drafted by the government of Indonesia, working with the Asian Development Bank, World Bank, and other development partners, has established "Key Principles in Restoring Lost Livelihoods through Economic Revival."

The principles stress the urgency for quick reconstruction support to fix the physical damage mainly to houses and enterprise buildings. It will give muchneeded cash to the affected people and considerably stem future income losses. The report notes that with about half of the total impact held in anticipated losses, the opportunity cost of not responding quickly is very high.

It also calls for as much community participation as possible and the mobilization of quick financial support in small doses to restore economic activity. The damage and loss assessment teams found that a number of those affected are eager to get credit from banks and other institutions. At the same time, public policy has a major role to play in doing whatever the government can offer by way of support.

The principles also call for future planning to better prepare for such disasters and to establish what markets can offer to protect enterprises in future situations.

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